Payments: the road ahead

When BPAY launched in the late 1990s it revolutionised online banking in Australia – a single bill payment service adopted across the national banking sector. It provided a safe, trusted way for consumers and billers to transact online at the early stages of internet adoption.

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Lynn Kraus (Left) and Jackie Kallman (Right)

Now 25 years later, Australians are some of the most digitally active in the world. Last year, more than a third of consumers used their mobile device to make a contactless payment in a week – an increase of 25 percent since 2019.

"It is a once in a lifetime opportunity in payments in this country to be part of creating what the future of domestic payments could be.”

That pace of transformation is only set to accelerate as digital innovations continue to influence the way we pay. The merger of BPAY, eftpos Payments Australia and the New Payments Platform Australia (NPPA) in February 2022 was about these organisations adapting to meet the moment, says Lynn Kraus, the inaugural Chief Executive Officer of Australian Payments Plus (AP+).

When Lynn took the job of leading the transformation of these three newly merged businesses, her vision was to enable the combined entity to fulfil its potential.

“If I go back and look at what the opportunity was that I was excited about, it is a once in a lifetime opportunity in payments in this country to be part of creating what the future of domestic payments could be,” Lynn says in a bluenotes podcast I recorded with her recently.

Lynn reflects on her 18 months at the helm but also looks ahead to the trends emerging that will change the way we transact in person and online.

AP+ is “on the path” to meeting its many objectives with the ultimate aim of reaching “network effect”, she says. This refers to the ubiquitous adoption required to ensure payment services can be used by consumers and merchants across the economy.

“There were some mandates that the ACCC (Australian Competition and Consumer Commission) put in place as conditions for the merger. We’ve met those mandates. There was a lot on the roadmap of the legacy businesses of NPP, eftpos and BPAY and we’ve delivered against those.”

She has also been focussed on bedding down a single structure for the three entities to ensure AP+ can attract and retain talent and can meet the needs of its members and the public.

Eighteen months into the journey, I think the things we committed to focus on are the right things. But payments is not an industry that stands still and we are impacted by global and local trends.”

What are those trends redefining how we will interact with payments over the next decade?

Lynn says the continued rise of mobile wallets as a preferred payment method, particularly retail in-store as well as online, comes with some important considerations for payments providers and policy makers.

“We've been thinking a lot about what that means, particularly when those mobile wallets are not owned in Australia, for the most part currently not regulated in Australia and what that means to the payment ecosystem in the longer term.” Understanding how Australians will spend in the future also means accounting for the focus of governments and central banks, such as the Reserve Bank of Australia.

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AP+ CEO, Lynn Kraus with her executive leadership team at the recent AP+ Town Hall

Digital evolution

She notes the global shift to real time payments, the increased prevalence of account-to-account payments and the exploration of central bank digital currencies (CBDCs).

“A lot of governments are piloting in CBDC. And so, we are thinking about what does the future of value look like? And as a network operator and an infrastructure provider, we want to be fit for purpose, whatever that value exchange may be.”

Lynn says the inevitable conversation around digitisation of payments for many customers comes down to the issue of trust.

“You don’t turn on the news or read a paper or anything online every day without seeing something about frauds and scams.”

“Trust is a huge pillar for us, and we are in a unique position as the domestic payments operator across three schemes to really think about what role we should play in the industry around enhancing and building trust across not only our products and our infrastructure, but also thinking about new opportunities for digital identity and what that means for Australia.”

Another priority for AP+ is to ensure the real time New Payments Platform (NPP) remains underpinned by the principles of trustworthiness, accessibility, innovation and efficiency – particularly as the legacy infrastructure for domestic electronic payments, known as the Bulk Electronic Clearing System (BECs), is phased out.

We've been working really hard with the industry to make sure that we are ready, that we are able to take the volume and to support our members to make that transition.”

With this transition also comes the need to consider the next generation of BPAY, which Lynn refers to as BPAY 2.0.

“How do we take BPAY, a product that's known and loved, into a more contemporary, digitally enabled, data rich environment for the next generation?”

Despite the pace of change, Lynn’s mantra is to keep things simple.

“It is a commitment we made to our members at the amalgamation. That simplification is around the schemes that we operate, it's around the products that we have and it also goes to the underlying infrastructure. So, you will hear much more from us about our ambitions around simplification over the next few months.”

Jackie Kallman is Head of Payments, Industry and Engagement at ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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